Hansons - ZAP - McMillan et al have created a false market

why do you see dozens of behatted track officials at hs meets every weekend? People love to have a hand in a sport even if it doesn't make any sense financially.

Seems to me there is nothing false about this market.

This is really speculation, but Hansons at least are probably not making a profit and not in it to make a profit. They do it because the Hanson brothers are running nuts who want to support and improve American running. Their "business model" is to most likely to support runners to the extent they can from a combination of their stores, Brooks sponsorship, etc.

I'm sure all the groups you mention are willing to support the most talented runners that are compatible with their programs. However, part of their method is using a team approach. They can't put all of their money into a single talented runner because then they wouldn't have teams.

Calling it a "false market" doesn't really make sense. It is a real market for runners looking to run after college. It's just probably not a way to make much money if you are a coach or someone trying to create a for-profit running club. From the sponsors' standpoint, I assume that Brooks, adidas, etc. think they get a good return from the advertising they get. Brooks has certainly gotten lots of positive publicity by sponsoring Hansons.

The fact remains that these groups with businesses attached get more publicity because of their respective "programs" attached. McMillan sells more coaching because of the team, the hansons would have the free advertising of articles in runners world without the team, zaps camp is more popular because of the team aspect. Would any of these guys sell the number of books they have without the legitimacy the team adds? It's all about the benjamins in the long run, or they'd all be distant memories

Costello wrote:

The fact remains that these groups with businesses attached get more publicity because of their respective "programs" attached. McMillan sells more coaching because of the team, the hansons would have the free advertising of articles in runners world without the team, zaps camp is more popular because of the team aspect. Would any of these guys sell the number of books they have without the legitimacy the team adds? It's all about the benjamins in the long run, or they'd all be distant memories

It's all a matter of how much any extra income from team publicity offsets the costs of the team. I don't know know those numbers. However, my guess is that the Hansons spend more on their team than any incremental increase in shoe sales from their stores makes it worth, just because I doubt sponsoring an elite team would drive sales for most recreational runners who would be uninformed about the team. I wouldn't hazard a guess about McMillan or ZAP.

So you're telling me that the hansons and their grungy stores and crappy return policy would have cornered the market in Detroit without the team? Or McMillan would be one of "America's best coaches" without the results of the elite club? These programs make what these businessmen are selling legit in a potential customers eyes.

I'm saying that I expect most Hanson customers show up in their stores because they want shoes for recreational running and have never heard of the Hanson Distance Project. That demand would exist whether the Hansons sponsored a team or not. I expect price, location, customer service, and involvement in local training and races all drive more shoe sales than sponsoring the team. I also expect the Hansons could probably eliminate the team, put the money they spend on it in a mutual fund and get a better return.

With McMillan, I don't have the information to judge. The team no doubts affects his credibility as a coach and his book and DVD sales. If adidas pays him something to coach or if he puts any of his own money into the team that also makes a difference. Is he netting more from it all than if he coached high school or college? I have no way to know any of that. My guess is that he is not doing much more than supporting himself.

Thanks for the responses. I actually hope to run one day for one of these clubs. As a business major though I just find it fascinating.

With ZAP, I would just add that sponsoring athletes is plainly part of the adult running camp business. To know whether "it's all about the benjamins" the question should be whether ZAP could make more or less money just having a lodge for the general public (or fishermen, yoga retreats, etc.) than sponsoring running camps where sponsoring athletes is one of their costs. Their costs are also apparently offset some by other sponsors like Reebok. I assume no one outside of ZAP knows those numbers but I doubt adult running camps is a tremendously profitable niche.

Costello wrote:

So you're telling me that the hansons and their grungy stores and crappy return policy would have cornered the market in Detroit without the team? Or McMillan would be one of "America's best coaches" without the results of the elite club? These programs make what these businessmen are selling legit in a potential customers eyes.

It sounds like you have it all figured out. When will be seeing the Costello Team? This will be a cash cow for sure.

If you wanted to check out the influence the Distance Project has on sales at their stores the best way would be to hang out at their shops and ask customers if they've heard of the Project. I suspect that there is so little interest in elite running among the masses of fitness runners and recreational road racers that the Project brings in very, very, little business for their shops.

Obviously, the shops were successful before they started the Project and maybe the added publicity translates to a few more customers. But I'd bet that the only people aware of what's going on with their shops are people like us who really follow the sport and most of us will never set foot in one of their shops because we're way out of the neighborhood.

Empire Free Trade wrote:...I assume that Brooks, adidas, etc. think they get a good return from the advertising they get. Brooks has certainly gotten lots of positive publicity by sponsoring Hansons.

When I started coaching in 2001 I was an adidas/Asics guy. Then as I started learning about the Hanson's Brooks Distance Project I started exploring Brooks. I hadn't run in Brooks since a pair of Vantage Supreme's in high school. Eventually my team got hooked up with Brooks for discount pricing and I bet we've bought 400-500 pairs of shoes plus a ton of clothing through that program since. Plus I know a bunch of my grads are still in Brooks, so it has wider sales reach than just while they're running in college.

I don't know how much Brooks makes off a pair of shoes or shorts, but for us it's all sales they wouldn't have made had they not had a presence with the Hansons.

there's also some indirect benefit that every shoe company has by investing in the sport. sponsoring pro runners might seem at times like "charity" but truthfully, the sport wouldn't exist as it does now without competition at the highest level. It couldn't be sustained the same way long term if no high school kid ever got to dream about running in the olympics or winning the NYC marathon. So shoe companies sponsoring athletes, races, and events are a big part of what keeps the demand for their products viable in the long term. It might not lead directly to a sale, but it keeps the industry afloat.

The McMillan group, for all intents and purposes, no longer exists.

Look what to know wrote:

Ritz, Rupp, Jager, etc. do not in any way influence sales of shoes or buying of gear. The whole business model is complete charity. Period.

...So I take it you've never worked in a running store with a significant HS or college base, eh?

I would disagree. The Hanson's Distance Project is very well known in the metro Detroit area, at least among area runners. I admit I could care less what type of shoes or clothes their elite athletes wear, but I support their stores because they give a lot back to the community. They sponsor many races, as well as have free group runs and speed sessions. Because I spend my money there, I find it quite gratifying when the program helps bring along a runner like Brian Sell or Desi.

Those programs are just trying to move the ball forward and maintain progress. They should be entitled to make as much $ as they can, using the athletes they can get a hold of. Running and all related facets of the business are a multi billion $ industry. I don't think 50-100 hotel rooms and plane tickets are too much to ask for (in reality)in a year.

Running is a multi billion $$$ / year industry and there should be more than enough $$$ for apparel companies,races, media, all the ancillary industries(sunglasses, watches etc.) + top tier and even middle to lower tier athletes.

One of the biggest conundrums with Running Related Sports Marketing is the ad and marketing revenue.

From an advertising side, the "Runner" demographic has been

an interesting one. As a whole running households are relatively high income earners. Unfortunately, running households are not frivolous impulse spenders.

They haven't created a "false" market, just one that isn't currently designed to turn a major profit. Like someone said, there aren't many groups willing to break even to develop the second tier runners.

I think ultimately there's a failure in the total system. There's a serious lack of development starting all the way down in middle school that persists all the way through college. To make the US Olympic Team currently in the 5k you need to be capable of running 13:00. While exceptions exist, if you haven't been developed to a 13:20-30 college (so the development needs to start BEFORE high school) runner it's an uphill battle at best and very likely not possible at worst that you'll ever represent this country at the Olympics or WC's. Does that make it a futile effort, it's not my place to say.

Do these groups help the sport, of course they do. I've worked with several of them and I can tell you the sport is better because of them. I would hesitate to call anyone coming out of these programs truly "world class" and while I'm sure that they'll say that's the goal I think most of the athletes know the reality of their situation.

Are these groups the answer to our lack of medals at championship meets (save the past few)? I doubt it. They are indicative of a general increase in interest and they certainly don't solve the financial woes of the sport, but then neither has the OP.

The Hansons make a lot of money. Brooks gives them a lot of money.

Coming out of college I was decent (29:47 10k, individual DI NCAA cross qualifier, 2:21 marathoner etc) but not elite or even national class by any means. I had dreams (I still do) of maybe cracking 2:15 in the marathon, but I knew that making the Olympics would be near impossible. However, I wanted to give post-collegiate running a shot...I wanted time and support to train and "live the dream."

The Hansons and Brooks took a chance on me and gave me that opportunity. I appreciate that. In a sport where guys much much faster than me were offered zero sponsorship I was offered free housing, coaching, $2500 in retail price gear and occasional travel/race entry. It was probably something I didn't deserve.

However, I will say this: The runners at Hansons work very hard in the stores (and train like madmen). We used to work 7.5 or 8.5 hour shifts on Saturdays after doing 20-mile long runs and you'd be balancing 3 customers at once with no break. I got in trouble for eating in the store (you get hungry when you run 140 miles a week). Sure, it's a job any highschool runner could do but at Hansons you get college grads (many from top schools and some with masters degrees) who live and breathe running selling shoes like hotcakes. Loyalty (from customers and runners) there is key. There were some very supportive local customers who run and are great in supporting the elite program...that was always nice to see and made things bearable. You'd shoot yourself in the foot if you got in trouble at the store because Keith and Kevin were not only your bosses there, but also your landlords and coaches (and "agents").

You get a lot in that program but you must give up on a lot of freedoms to be there. It is not all peaches and cream. I am much happier where I am now in life and running, but I appreciate the opportunity that I was given there has allowed me to springboard into running more full-time.

Because of runners like Brian Sell and Desi the Hanson bros get to travel the world and bump heads with the world's best coaches on the biggest stages (ie Olympics, Boston, etc). A lot of times they fly first class and wine and dine with the elite. Their return on investment really paid off for them (both live in million dollar houses I'd say) and the whole project was a smart move on their part. They have capitlized on the whole running market around the metro-Detriot area and I was always amazed with how busy the stores were with new runners/walkers. I don't agree with most of their coaching decisions (not scientifically sound at all) and program policies, but they made a smart business decision in starting the program. I'd say that they really are self-made millionaires living the American dream....they initially had to work very hard for that though and that is to be respected.

As a sign on one of the running stores read: "We're in the business of running...and business is good!"